Medicare, Medicaid cost Connecticut towns money for ambulance calls

By Jennifer Swift, Register Staff

Sunday, December 2, 2012

Every time an ambulance transports a patient to the hospital, it embarks on a game of insurance roulette.

Like an emergency room, ambulances won't turn someone down based on insurance coverage. And a lot of the time, that means the town, nonprofit or ambulance company is going to hemorrhage money with each trip because of federal insurance program rules.

And unless Congress acts by the end of the year, the situation could get even worse.

In towns throughout the state and country, a majority of patients an ambulance transports are on Medicare. That majority translates to a huge gap in revenue because the federal government, which regulates Medicare, doesn't fully reimburse the cost of that trip.

It's not that most ambulance services lose money overall; but the Medicare gap and other billing issues prevent them from collecting all the money they are owed.

The state of Connecticut sets an authorized rate every year, mandating what the cost of an ambulance ride is. Rates are $547, $841 or $868, depending on the level of care needed. Medicare determines that an ambulance service should be paid 55 to 62 percent of that rate. Once that percentage is determined -- it calculates the bill and pays 80 percent, leaving the additional 20 percent to be paid by the patient.

In a town like Branford, where 57 percent of all patients transported are on Medicare, or Madison, where 65 percent of the population is on Medicare, this translates into a loss of several hundred thousand dollars in revenue each year -- which can hinder the services' ability to purchase equipment or vehicles or hire needed staff.

Private companies, like Hunters Ambulance and Transportation, which services five towns in Connecticut, face the same battle: 50 percent of Hunters' patients have Medicare for insurance.

Branford Assistant Chief and Fire Marshal Shaun Heffernan said the department, which operates jointly with EMS and fire, collected $750,000 from Medicare last year. But Branford could have collected double that if Medicare paid the state rate. That additional $750,000 becomes just another write-off.

Ambulance companies also are seeing another unique problem as the economy worsens: Patients on federal Medicare programs receive a check directly, and Heffernan said there is an increase in the number of people who don't pass that check forward to pay off their bill, and instead keep it.

That debt, in addition to others -- like patients who still have a balance after their insurance pays, or who have passed away -- has added up over time. Branford has $1.2 million in debt that has accumulated over 11 years from 2,500 accounts, which doesn't even include those mandatory Medicare write-offs.

Though it sounds hefty, Heffernan says when compared to the total revenue the ambulance service brings in as the second largest revenue source for the town, it's really not. Last year, the Fire Department brought in $1.5 million and sent $127,000 to collections. Branford uses a third-party for debt collection, and boasts a 91.4 percent collection rate.

Heffernan said the department tries to work with people all the time with payment plans -- even if it's $10 a month -- to get back the money it is owed.

Madison's ambulance association operates as a nonprofit, and the employees do not work for the town, explained Chris Bernier, EMS director. But Madison, too, sees a problem with patients getting a check from their insurance provider and not signing it over -- though the biggest loss remains the Medicare and state rate gap.

"The money we lose is money we can't put back into the service we offer to help the community," Bernier said. "Not being able to get the full revenue definitely affects us -- it hits us in everything from pay raises to getting specific equipment we need."

For the last fiscal year, Madison billed $1.2 million but received $740,000. Medicare takes the biggest chunk out of those billed funds, at $300,000, and the second highest debt contributor is Medicaid.

Unlike Medicare, which does a percentage of the rate, Medicaid pays one flat rate for any kind of ambulance service: $218.82. That means the gap per ride from the state rates can range from $328 to $650. Branford and Madison officials said they don't respond to nearly as many patients with Medicaid as they do with Medicare.

An increase in the number of people being transported who are on Medicare exacerbates the problem. From 2004-10, according to a study by the U.S. Government Accountability Office, Medicare transportation grew by 33 percent.

While there may be a loss in revenue, the towns still are making money by offering the services, pointed out Milford Mayor Ben Blake. Milford recently took control of its billing, which had been done by American Medical Response, and is expecting a $300,000 to $400,000 increase in revenue because of it, Blake said.

"Milford will receive the money instead of someone else," Blake said.

He said because the state is forecasting a $1.2 billion deficit, local communities need to come up with new forms of revenue. Blake said the city is seeking requests for proposals for a company to oversee EMS billing.

"We'll make sure our billing company ensures the insurance companies pay what they owe," Blake said.

Private businesses hurt from the Medicare gap, too.

David Lowell, chief operating officer for Hunter's Ambulance and Transportation, which serves Meriden, Middletown, Berlin, Portland and Middlefield, said the Medicare and state rate gap is something they can't recoup.

"Even if they pay us about 50 percent of the cost of what it costs to put EMTs or paramedics on an ambulance with the equipment, we're already underfunded by about half," Lowell said. "They pay half of what it costs us to do that call. ... There's no way to really make it up when you're state regulated. Some of that loss is passed onto our other private rates."

Lowell compared the way they work to auto insurance -- they have to raise costs for other transports that are non-emergency to make up for losses elsewhere, like auto insurance does to make up for underinsured or uninsured drivers.

While the Medicare reimbursements don't meet the state rates, Lowell said he thinks the state regulation is a good thing, to keep it fair for people who need the services.

The difference between companies like Hunter's or American Medical Response and services like Branford's and Madison's is that the private companies are licensed, whereas Branford's and Madison's are certified. Certified companies cannot bill for taking a patient to a facility for non-emergencies, while the others can -- and make money from it.

Lowell and Bernier both wondered how the Affordable Care Act will affect Medicare payments.

The Department of Health and Human Services explains that the ambulance fee schedule, which is the Medicare rate to be repaid, is set and updated equal to the percentage increase in the Consumer Price Index for All Urban Consumers.

The National Volunteer Fire Council is actively advocating for a bill, called the Ambulance Access Preservation Act, to help cover the gap between the cost of service and Medicare reimbursement. There are certain add-ons set to expire, and, if they are not passed by Congress, the situation for Medicare reimbursements will get even worse, said David Finger, director of government relations for NVFC.

"By the end of the year, if nothing changes, these add-on payments are going to go away. This is as much about preserving what we have now as much as it is (about) increasing (it)," he said.

The proposed bill would extend the add-ons to 2018. The add-ons and the bill might not make the situation much better when it comes to reimbursements, but it would ensure things don't get worse. Finger said the bill could be passed with the other end-of-the-year "fiscal cliff" tax items, or as a standalone bill.

"If the rates go down, then it's going to depend on the agency. I doubt anybody's going to show up at a house and not take somebody to the hospital because they have Medicare, but if you can't afford to operate anymore because you're taking a big loss on all your transports, it's not unheard of for first-responder agencies to go bankrupt or curtail services," he said. "They can try to muddle through, but they won't have enough money to purchase new equipment or update their apparatuses."